In my experience, when clients decide to change providers, the rationale for change is sometimes to overcome the gaps in the current provision. These were created by less-than-optimal selection of the current contractor, poor scopes of work and the terms of the contract. It could sometimes make more sense to review the current contract or at least review the original process to ensure a better outcome next time. Otherwise, they run the risk of a repeat performance.

However, there are other reasons than just less than expected outcomes from the current provider. The authority may have decided to bring responsibility for service delivery back in-house. They will have undertaken a make or buy analysis and determined that in-house provision is better value for money and less risk. The client is not satisfied that it is securing value for money and that other options are now available in the marketplace. In some cases, the current agreement is nearing its termination date, and the contractor does not wish to continue or to take part in the forthcoming competition. Often, the client’s leadership has changed, and the new regime wants to adopt a radically different approach to service delivery. This is sometimes with the focus on in-house delivery. One of the most common reasons is deterioration in the relationship with the current provider. Both sides may feel that there is a lack of mutual benefit being derived from the contract. Whatever the reason, the transition from one provider to another has the potential for disruptions to service delivery (for which the client may be contractually obligated to provide and may lead to contractual claims and additional costs. These can be reduced and avoided by a robust and well-planned exit process. A lot will depend upon the terms of the original contract and the provisions made for the transfer from one service provider, and the relationship that existed between the parties involved. If the relationship is poor, the current provider may be less than fully cooperative in facilitating a smooth transition. This is an important risk in the changeover process, which is not always considered by the authority.

To facilitate a smooth transition and reduce the risk of disruptions and costs, some well-known key elements in the process have to be considered, and provisions made for these, including:

1 Termination: A key consideration is whether or not the current agreement provides for transition support during the termination period. If the original contract was properly drawn up, then it will include the development of a transition plan and coordination with the new provider. The agreement should also include the delivery of relevant services by the current provider for a set period of time and at specific rates and costs.

2 Costs and Assets: The agreement needs to address the return of tangible or intangible assets from the current service provider. These may include equipment used by the current provider and any IP that belongs to the contractor, for example, construction drawings, designs and operating manuals. However, depending on the services provided, the authority may consider licensing critical software directly to mitigate any transition risks.

3  Implementation costs: The client will need to budget for the implementation costs associated with the transition and onboarding the new provider. Therefore, they will need to create a well-resourced project team to manage the process. There may be a need to seek support and advice from legal counsel and/or consultants. These costs will also include any internal management changes.

4 People: The client will need to ensure that it has continued access to key people and resources during the handover period. Another interesting question is whether the new provider will have the right to recruit key personnel from the departing provider? This may be affected by the said employees’ contract of employment. The agreement should require that the provision of the ongoing services during the termination period will still be required to meet current KPI’s and other standards of service.

5 TUPE issues: The client would need to ensure that if staff from the original contractor are to be transferred to the new provider, this process has been properly and professionally conducted. The authority does not want to inherit a dissonant and demotivated provider workforce. The client’s HR specialists must be involved early in the decision to transition to a new provider.

6 Software: Will the new provider be able to work with the client’s software system and successfully interact with other applications? What are likely to be the system integration and implementation costs, and who will be responsible for covering them? If the client is changing the provider of software, then the IT dept will need to confirm that the new software service provided by the contractor will not create security vulnerabilities in the system or compromise its GDPR compliance.

7 Intellectual Property The client will need to arrange for the return of the current provider’s IR in an agreed form. However, depending on the services provided, the client may consider licensing critical software directly to mitigate any transition risks.

8 Knowledge Transfer. The client should have access to all data that relates to its operations for knowledge transfer and training. All such data should be transferred in an agreed format to avoid unnecessary data entry or conversion costs.

9 Third-Party Contracts. The need to assign third-party contracts between the service provider and its subcontractors has to be reviewed. The original agreement should require the current service provider to include appropriate provisions in its third-party agreements to ensure that they will be assignable to the authority or the new provider to ensure continuation of service.

10 Data and Information: The current agreement should make provision for the return of appropriate data and relevant documentation. This is an important element given that the current provider may delay the transfer of critical data or information, which will affect operations as leverage to make claims to recover costs that should have been covered included in the original agreement.

The transition from one provider to another ( if not managed properly) is full of risks and negative consequences to the authority. These could include claims from the current contractor to recover costs and the new provider, if, for example, they are unable to perform due to a lack of data. The disruption of service provision and the inevitable reputational damage are often the most lasting consequences of poor handover. The reader will have no doubt noticed that many of the risks associated with service provider change should have been covered in the original agreement. However, if they have not been covered in precise and unequivocal terms, then the authority may experience a very difficult and costly transition period. This will be especially true if the parties are separating on bad terms. Therefore, the first step should be to carefully review the current agreement to see if the 10 points are properly covered. However, if the 10 considerations are not met, then the client will need to negotiate and amend the contract with the cooperation of the current provider. As we all know, agreements should be designed to allow them to evolve, to reshape and change to guide all parties to work together to achieve the best outcomes. The client will need to persuade the current provider that an orderly transfer would be in both their interests and would avoid costs and maintain their respective reputations in the marketplace as professional operators.